 "RJio targets 100 million customers in 12 months")
While Reliance Industries Chairman Mukesh Ambani wants the target to be achieved in the first 100 days, the leadership and analysts say a realistic target would be the first 12 months after launch. When contacted, a RJio spokesperson did not want to comment on the launch strategy.
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| Bharti Data subscribers: 51 mn since data launch Data ARPU: Rs 193/ month 62,000 3G cell sites Idea# Data subscribers: 41.3 mn since data launch Data ARPU: Rs 144 / month 40,000 3G cell sites RJio* Data subscribers: 100 mn in 12 months Data ARPU: Rs 246-500 /month 75,000 4G cell sites *RJio figures are targets; #Idea offers 2G, 3G only Source: Companies, analyst estimates/reports |
Telecom operators have reason to worry. RJio is targeting the existing base of high-value customers, who account for 30 per cent of the subscriber base and 70 per cent of revenues. The firm intends to offer them unlimited access to high-speed broadband services (4G or LTE) on a subscription-based model. Airtel, which launched 4G services in August, has not disclosed data on the number of subscribers added after the launch in about 300 towns. It has also not disclosed revenue figures per 4G customer.
A section of investors and analysts say the 100-million subscriber target is achievable, given RJio's distribution reach of 1,000 company-controlled outlets and one million distributors for recharge vouchers.
The scale of RJio's ambition is apparent from its infrastructure. At the time of its launch, RJio is likely to have 75,000 4G cell sites, 250,000 km of optic fibre and 0.65 million sq ft of data centre capacity. The data centre capacity signals the company's intense focus on video. In contrast, Bharti's data centre subsidiary, among the top three in India by revenue share, says Deutsche Bank, has only 0.16 million sq ft of capacity.
Deutsche Bank Global Markets expects RJio's mobile business to have 94 million subscribers (15 per cent of smartphone users) with an ARPU (average revenue per user) of Rs 246 a month, implying 8.5 per cent of wireless revenue share. Deven Choksey of KRChoksey expects RJio to add 100 million subscribers in the first 12 months of launch, with an ARPU of Rs 500 per month. This would add to a monthly revenue of Rs 5,000 crore and annual turnover of Rs 60,000 crore. With an operating margin of 40 per cent, RJio would generate an Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 24,000 crore in the first year itself and a profit before tax of Rs 12,000 crore.
Unlike its peers, Jio does not intend to price its service based on per-second or per-minute, as it intends to be a "bytes factory" and not a "minutes factory". Reliance fancies itself as a digital services provider and wants to offer a gamut of services based on subscription, to lock in the consumer.
RJio's telecom service will only be a platform around which it will wrap a host of online services. It has identified five key verticals to lure customers - entertainment, education, health care, e-commerce and social media/gaming. The company calls this the NDA strategy - network, device and applications.
Investors and analysts also say RJio's entry will be disruptive. So far, the assessment was that RJio's spectrum in the 2300 MHz band would have worked to its disadvantage, as this spectrum is conducive outdoors and not indoors. But, RJio seems to have fixed this problem by acquiring spectrum in the 800 MHz and 1800 MHz bands in nearly 20 circles.
RJio's spectrum covers 90 per cent of the industry's coverage through a mix of 800/1800 MHz bands. In addition, it has 2300 MHz across India. According to Citi Research, RJio's 800 and 1800 MHz spectrum covers 92 per cent of the industry revenue for LTE against Bharti's liberalised 1800 MHz, which covers 32 per cent of industry revenues. Rivals have attributed the delay in RJio's launch to its weak spectrum portfolio, but sources claim the company has delayed the launch as it does not want to take on high depreciation and interest charges on its books without having the requisite customer base. A full-scale commercial launch is likely in end-March or beginning of April.